Construction output drops

The latest ONS construction statistics have been published in the three-month on three-month series.

Following on from the more volatile monthly series, the three-month series gives a fuller picture of the construction climate.

The latest statistics show a difficult start to the year for the industry, with a decline in output for the sixth consecutive month. Construction output has been calculated as falling 3.4% in April, the biggest fall seen since August 2012.

With figures from the monthly statistics showing output rebound somewhat in April, the three-month series shows that the industry suffered quite badly over the winter period. Anecdotal evidence from the monthly series points towards the terrible weather in March slowing construction starts on site and this may well have affected the winter three-month on three-month, with the industry in general slow-down mode over winter. The April monthly figures showed an increase of 0.5% as the spring weather turned sunnier.

With construction output peaking in December 2017, at 30.3% above the lowest point in the last five years (April 2013), we must still bear in mind that output is still 23.4% above the low point, and confidence in the sector remains steady.

Commenting on the latest series, Peter Vinden of the Vinden Partnership said: “The latest three month series show the UK construction sector has suffered over the winter, dropping from a high of 30.3. The drop of 3.4% in the three months from February to April is one of the biggest drops in output since the recession in August 2012.

“The terrible weather has obviously played a part, with starts on site and completions delayed due to snow, leading to a stuttering start to the year. Hopefully as the weather turns we will see the numbers rebound.

“However, rising costs of materials is playing its part in holding back the industry, with the economy still in turmoil and no resolution to the Brexit question all playing a role. Recent research from the FMB shows 84% of builders believe costs will continue to rise in the short term.

“The struggle to secure skilled workers – and the wage premium they carry, will also affect construction firms large and small.

“The next nine months will be crucial for many industries; in particular construction with its reliance on EU workers, the industry is also subject to the vagaries of materials costs.”